Knowledge Creation Facing Hierarchy: The Dynamics of Groups Inside The Firm

The aim of the paper is to analyze the selection of routines within organizational structures characterized by different cognitive representations. Following a brief discussion on the role of hierarchy and the related problem of organizational practice selection in the evolutionary literature, we model the interactions between different groups within a firm trying to interfere with its coordination mechanisms in order to support their own idiosyncratic practices. Numerical simulations highlight differences in the ability to learn in different organizational set-ups with diverse patterns of knowledge distribution, also reproducing configurations analysed in the empirical literature. It is shown that networking schemes are the more profitable organizational configurations because of their dynamics of learning, although they are very sensitive to the truce problem.